(Ecofin Agency) - In April, Côte d'Ivoire reached a staff-level agreement on a $3.5 billion EFF/ECF Arrangement. The agreement has now been validated by the IMF executive board after a meeting.
Last Wednesday, the IMF executive board approved the $3.5 billion reform program negotiated by Côte d’Ivoire weeks earlier. The 40-month program includes an Extended Fund Facility (EFF) and an Extended Credit Facility (ECF). It allows the disbursement of an amount equivalent to 400% of the country's quota to maintain short-term macroeconomic stability. The medium-term objective is to support deeper economic transformation to push Côte d’Ivoire into the “upper-middle income countries” category.
The approval comes about a month after the staff-level agreement was announced. In the release announcing the staff-level agreement, the IMF explains that Côte d’Ivoire demonstrated strong economic fundamentals through its resilience in the face of three successive shocks (Covid, the war in Ukraine, and the global economic tightening). Nevertheless, the IMF believes that several key reforms are needed to put the economy back on a more inclusive growth path and support its development plan. One of these reforms is the removal of subsidies on petroleum and food products and their replacement with "targeted transfers.”
"Over the medium term, sustained domestic revenue mobilization is key to creating fiscal space to finance deeper economic transformation toward upper middle-income status. This will be supported by the development, publication, and implementation of a medium-term revenue mobilization strategy, which should seek significant reductions in wasteful tax expenditures and tax exemptions, particularly for the VAT," said IMF Deputy Director Kenji Okamura.
The reforms will also aim to improve the institutional and legislative framework for debt management while helping Côte d'Ivoire increase its contribution to the international reserves of the West African Economic and Monetary Union (WAEMU). Ultimately, the reforms are expected to positively impact the country’s national development plan, which will stimulate private-sector-led growth, notably by strengthening good governance, expanding financial inclusion, and improving the business climate.
The IMF Board's decision allows for an immediate disbursement of US$495.4 million in budget support.
Moutiou Adjibi Nourou